Make in India Program
Under the initiative of the Prime Minister of India, the Make in India program has been introduced. According to the government, this is a major initiative at the national level specifically designed to:
- Facilitate investment
- Foster innovation
- Enhance the development of skills
- Ensure the protection of intellectual property rights as well as
- Build a manufacturing infrastructure that is best in class.
Among the various available options for investment there are:
- Automobile components
- Aviation and
- Defense manufacturing among many others.
This will give the automotive component manufacturers a lot to cheer about.
The Automobile Sector
Currently, as per published reports:
- Among the global automotive industries, India is the sixth largest with the annual automobile production of twenty four million vehicles last year.
- The country today boasts of having the fifth largest market in passenger and commercial vehicles. This has been possible on account of several factors, one of them being the tenacity of the automotive manufacturing companies.
- India has four very large manufacturing hubs and these include:
* Delhi, Gurgaon and Faridabad in the north of India
* Mumbai, Pune, Nashik and Aurangabad in the western part of India
*Chennai, Bangalore and Hosur in the southern part of India and
* Kolkata and Jamshedpur in the eastern part of India.
According to available reports the Indian automotive industry’s contribution is around 7% of the country’s GDP in terms of volume.
It is expected that by 2020 more than 6 million vehicles will be sold each year including both hybrid and electric vehicles.
Simultaneously the 2-wheeler production has also grown from around 8.5 million vehicles each year to almost 16 million vehicles within the last 7 years.
The Automobile Components Industry
The automotive components’ business naturally rides on the back of the automotive business. Therefore, a similar healthy trend is apparent in the business of automotive components as well. The pertinent details include:
- Today the size of the automotive component industry is approximately US $ 39 billion as per the year 2015-2016.
- Its contribution to GDP is around 2.9%.
- The Compound Annual Growth Rate or CAGR of the automotive component industry was approximately 14% during the year 2015-2016.
- During the above period the exports from the component industry increased more than three times from US $ 3.2 billion to $ 10.81 billion.
- During the last FY the exports from the automotive components industry contributed 4% to the total exports of India.
- This vital industry has the aim to achieve by 2026 a turnover of US $ 200 billion and export between US $ 70-80 billion as well as an investment of US $ 30-40 billion. These figures represent a five times growth.
The Perfect Industry to Invest in
- The Indian automotive components industry is the perfect industry to invest in today. The reasons are as follow:
- Today India represents the ideal emergent global hub for the sourcing of automotive components
- India is cost competitive in comparison to other countries engaged in automobile manufacturing.
- It is also one of the few Asian countries that have the technological prowess for both design and manufacture to perfection.
- Geographically India is very close to the important automotive markets. These include:
India also has a favorable policy for export/import.
India offers an excellent infrastructural support for the automotive industry. This includes diverse automotive training institutes as well as automobile design centers and SEZs for the manufacture of automotive components.
- There are other drivers beside those that have already been mentioned. Some of these are:
- Today India with a growth rate of GDP above 7% is the fastest growing economy in the world.
- The demand for automotive components will further spike because of a reduction in the excise duties for the automotive sector.
- India is a youthful country. If this power is handled right there would be a huge pool of educated and trained skilled manpower. This will push up the manufacture industry further. The automotive sector including the automotive components sector is sure to respond favorably.
- The growing middle class is a positive driver for the growth of the automotive industry.
About The Author
Varun is an Aerospace engineer working in Dynamatics Technology. The largest producers in of hydraulic pumps, automotive components, aerospace components and systems in Europe and India. Connect to know more.